Gold Coast City Council v Canterbury Pipe Lines - [1968] HCA 3 - HCA 1968 case summary — Zoe

CTHHCA

Gold Coast City Council v Canterbury Pipe Lines

[1968] HCA 3

High Court of Australia|1968-07-01|Before: Windeyer JJ

View original source

At a glance

Source facts

Court

High Court of Australia

Decision date

1968-07-01

Before

Windeyer JJ

Source

Original judgment source is linked above.

Judgment (66 paragraphs)

[1]

High Court of Australia Barwick C.J. McTiernan, Kitto, Menzies and Windeyer JJ. Gold Coast City Council v Canterbury Pipe Lines (Aust) Pty Ltd [1968] HCA 3

[2]

The Council of the City of Gold Coast (the Council) and Canterbury Pipe Lines (Aust.) Pty. Limited (the contractor) on 5th March 1965 entered into a contract for the construction by the contractor of certain sewers and house drains at Surfers Paradise and Southport in the State of Queensland. Disputes having arisen between them, they were referred to the arbitration of an engineer mutually chosen by the parties. The terms of reference provided for the delivery of pleadings which in fact occurred. The areas of dispute were extensive and included claims that the contract had been unlawfully terminated by the Council, and that the engineer had wrongly refused or failed to issue certificates for sums claimed properly to be due. The contractor's statement of claim also included a specific claim to be awarded interest at twice the ruling deposit rates of the Commonwealth Savings Bank upon the amount otherwise awarded to be paid to it. This was a rate of interest specified in the contract as payable to the contractor on all moneys payable to him but unpaid from the date at which such payments became due. Whilst issue was taken on this claim, no point of law appears to have been raised either in pleading or in argument that it would be incompetent for the arbitrator to accede to this particular claim. After a lengthy hearing, the arbitrator delivered to the parties a bundle of sheets of paper, numbered consecutively one to fifteen inclusive and each initialled by him. The first sheet was entitled in the matter of the arbitration between the parties. The first fourteen sheets contained the arbitrator's observations upon the witnesses called before him, his reasons for making an award, some calculations or figuring in relation thereto as well as a number of general observations by him, somewhat discursive and at times irrelevant. Towards the end of these fourteen sheets, the arbitrator expressed the conclusions to which he had come and carried them out into figures which produced the grand total of his award. Having done this, the arbitrator concluded these pages with the statement "The formal Award follows immediately hereafter". Then the fifteenth page of this bundle of papers was formally entitled in the matter of the arbitration between the parties and headed "Award". Its opening expression was "This is the award of ". It recited the contract between the parties, the fact of the disputes, and the reference to arbitration, and then proceeded "Now be it known that I make my award of and concerning the matters so referred to me as follows, that is to say: "I award and direct " " and then follows the substance of the award.

[10]

It is quite settled that the error of law for which the Court may set aside the award of the arbitrator must appear on the face of the award: that is to say the award must ex facie be founded upon an error of law, including of course in that expression, the construction of a statutory provision or a written instrument. The award is the arbitrator's product and it must follow, in my opinion, that that which constitutes his award is what the arbitrator intended or must necessarily be taken to have intended should constitute it. It is said by high authority, and I respectfully agree, that the award will include all documents which are incorporated in it: see Hodgkinson v. Fernie [1] and Champsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. [2] . That means, in my opinion, that those documents which the arbitrator intended to form part of his award, and with respect to which he has sufficiently evidenced or effectuated that intention, are part of his award. I do not read Lord Dunedin's expressions at pp. 487, 488, of the report of the last-mentioned case to go further than this. It is not, in my opinion, the physical appending of a note to the award which determines the question whether or no the note forms part of the award. It is the intention of the arbitrator in appending it which is definitive. That intention of course might have to be inferred from acts, such acts including the physical acts attendant on the delivery of the award: but it is not the incidental but the intentional which will be relevantly significant: for example, in Melbourne Harbour Trust Commissioners v. Hancock [1] there could have been no doubt as to the intention with which the arbitrator "bound up" his reasons with the award: see per Irvine C.J. as quoted at p. 576 of the Commonwealth Law Reports. The decision of the Court of Appeal in Giacomo Costa Fu Andrea v. British Italian Trading Co. Ltd. [2] and the cases dealing with the extent to which a reference in the award to a document incorporates it so as to present its whole content to be examined by the Court, in my opinion, conform to this analysis: cf. Blaiber & Co. Ltd. v. Leopold Newborne (London) Ltd. [3] .

[14]

But more significantly the law as to arbitration has been greatly altered since 1802. Now if either party requires the decision of the Court upon a point of law not itself specifically committed to the decision of the arbitrator, the statement of a case for the opinion of the Court may be required. If the arbitrator desires to submit a question of law to the Court he can state a case or make his award in the form of a stated case. Consequently, the expression in the arbitrator's award of a matter of law bearing upon the substantive award he intends to make is a matter of his choice. It is not for the Court to seek opportunity to correct his errors of law: on the contrary, in my opinion, it is for the Court to favour the finality of an award by an arbitrator of the parties' choice, or at any rate of their contriving. If satisfied that he intended to expose his reasons for making it as part of his award, the Court will set the award aside if error of law fundamental to the award then appears. Such an intention may of course be inferred from surrounding acts and circumstances, or by construction of the award itself. But I cannot regard the physical circumstances attendant on the delivery of the instant award as determining what comprises the award. That the arbitrator's reasons are delivered at the same time as the award or even that they are bound up with the award in one bundle of consecutively numbered pages does not, in my opinion, necessarily mean that the arbitrator intended thereby to expose his reasons as part of his award. But it may be that on balance the proper inference from all the facts, including the manner of expression of those reasons, is that he has intended to do so. As to this particular case, no doubt opinions may vary but with due respect to those who hold a contrary view, I am not prepared myself to draw the inference from all the available material in this case that the arbitrator intended to incorporate his reasons in his award. That he desired to inform the parties of his comments, observations, reasons and calculations is quite evident. If he wished to do so, as he did, the natural time for such a communication would be the time when he published his award. Undoubtedly he expressed them in the manner in which and at the time at which he did so that the parties might understand why he awarded a particular global sum, and so that they should be apprised of the constituents of that sum. But these conclusions do not mean to my view that he intended his award to comprise all these comments, observations, reasons and calculations. Nothing in the award harks back to the reasons. Indeed, the choice of a global sum as the amount of the award, rather than awarding a series of sums appropriate to various headings of claim tends in my mind against the conclusion that he intended his reasons to be part of the award itself. I would not be prepared therefore to decide that the contents of the first fourteen pages formed with the contents of the fifteenth page part of the arbitrator's award. It follows that, in my opinion, there was no error of law apparent on the face of the award.

[25]

The other question concerns the proper course to be taken in view of the appearance on the face of the award of an error in law as to the inclusion of the $16,180 for interest. I agree with Menzies J. that if anything were to be set aside by reason of this error it would have to be the award as a whole. Of course where an award contains several operative provisions which are in their nature severable from one another, the invalidity of some of those provisions does not necessarily infect the others. The English authorities on this proposition, from Storke v. De Smeth [1] onwards, may be found in Russell on Arbitration, 17th ed. (1963), pp. 347-349, and a reference may be added to In re Bailey and Hart [2] . Where provisions that are bad are severable from others that are good the course usually followed is to dismiss the proceedings to set aside the award, leaving the bad provisions to be ignored as simply void. But here the award, according to both the documents, is for a single sum of $478,478; and the fact that in point of law the reasons given by the arbitrator justify only an award of that sum less the interest does not make the award severable into two provisions, one awarding the interest and the other the balance. All that is before us, however, is an appeal against a decision of the Supreme Court refusing to set aside the award on grounds other than the inclusion of the interest. Of that the appellant made no complaint to the Supreme Court, and in my opinion the proper course is to affirm the decision appealed from as having been correctly given. We could not, I think, take upon ourselves the jurisdiction under s. 21 of The Interdict Act of 1867 Q. to remit the matter to the arbitrator for reconsideration and redetermination, with a view to the removal of the interest from the amount awarded, for no application under s. 21 was before the Supreme Court in the proceedings out of which this appeal has arisen. It may be that such an application may yet be made, and I express no opinion as to what may or ought to be done if it is.

[51]

Looking therefore at the document as a whole; listening to the criticisms to which it is obviously open as an exercise in reasoning - the Full Court not unfairly stigmatized it as "discursive, somewhat didactic, and, one suspects, in parts quite irrelevant"; and reading the judgment of the Full Court dealing with the objections to it, I have reached the conclusion that it is only as to three matters that any case of error of law upon the face of the award has been made which is of sufficient weight to warrant anything more than a statement that a number of points were made and disposed of sufficiently in the course of argument. The first matter requiring further consideration is the adoption by the arbitrator of "day labour" as the basis for his calculation of the amounts which the respondent became entitled to recover after the appellant's wrongful cancellation of the contract - something which the arbitrator found to have occurred. In reaching his conclusion to adopt the "day labour" basis the arbitrator did make a reference to a provision of the contract which seems to me to be not very much in point, but despite this reference I see no reason why in all the circumstances the arbitrator was prevented by law from adopting "day labour" as the basis for his calculation although it might be thought to have produced an over-generous award. The second matter of criticism related to the allowance of £28,233 and £26,880 as "Loss of use of plant" in addition to the allowance in full of the contractor's claim in Ex. YY and to substantial sums for loss of profit. It was argued by the appellant that the arbitrator had duplicated some items and maybe he did. My doubt, however, whether or not the arbitrator made an error of calculation is not enough to support a finding of error of law upon the face of the award. This brings me to the third matter and I have come to the conclusion that an error of law does appear upon the face of the award in the arbitrator's award of a sum of $16,180 interest. The arbitrator said:

[55]

The effect of the error which I have found upon the face of the award remains for consideration. In the first place the respondent contended that the error was immaterial because the determination whether the contract provided for interest upon all sums recoverable upon its wrongful cancellation was a matter specifically submitted to the arbitrator by cl. 41 which submits "Any question, difference or dispute whatsoever" arising "between the Principal and the Contractor upon or in relation to or in connection with the contract which cannot be resolved by the contracting parties to their mutual satisfaction". It was contended therefore that the construction of condition 35 having been submitted to the arbitrator his award could not be impeached simply because his construction of that condition was otherwise than in accordance with law. However, this mistakes the nature of the submission. This is not a submission of a specific question of law, viz. the construction of the contract or of condition 35 of the contract; it is rather a general submission of matters in which the question of the construction of the contract will no doubt be material but the basis of the submission is that the contract will be construed according to law. The distinction that is relevant was drawn in F. R. Absalom Ltd. v. Great Western (London) Garden Village Society Ltd. [1] . There Lord Russell of Killowen, with the concurrence of Lord Buckmaster and Lord Tomlin, said: "My Lords, it is, I think, essential to keep the case where disputes are referred to an arbitrator in the decision of which a question of law becomes material distinct from the case in which a specific question of law has been referred to him for decision. I am not sure that the Court of Appeal has done so. The authorities make a clear distinction between these two cases, and, as they appear to me, they decide that in the former case the Court can interfere if and when any error of law appears on the face of the award, but that in the latter case no such interference is possible upon the ground that it so appears that the decision upon the question of law is an erroneous one" [1] . Lord Wright, in referring to the rule that error of law upon its face invalidates an award, said: "The rule in truth applies to the ordinary case where, in the words of Lord Dunedin [2] , the submission refers "to the arbitrator the whole question whether it depends on law or on fact". To be contrasted with such cases there is the special type of case where a different rule is in force, so that the Court will not interfere even though it is manifest on the face of the award that the arbitrator has gone wrong in law. This is so when what is referred to the arbitrator is not the whole question, whether involving both fact or law, but only some specific question of law in express terms as the separate question submitted; that is to say, where a point of law is submitted as such, that is, as a point of law, which is all that the arbitrator is required to decide, no fact being, quoad that submission, in dispute" [3] .

[61]

Except where the parties have submitted a particular question of law to an arbitrator and have agreed to be bound by his decision, a court can and should set aside an award of an arbitrator if an error of law appears on the face of it. That rule, first stated in Kent v. Elstob [2] , seems to have been established originally in cases in which a question arising in an action at law has been remitted to an arbitrator. In cases of that kind the court, naturally enough, could not countenance the arbitrator departing from the law which it would have applied in the action. However, the rule that an award is examinable for error of law seems now to have a wider scope, and to be applicable to any dispute which parties submit to arbitration in accordance with the statutory provisions in that behalf. What then is an award the face of which can be examined for error of law? An award is very often a document which announces only the arbitrator's ultimate finding on the matter submitted for his determination. This finding may be no more than that a specified sum of money is payable by one party or the other. But the arbitrator may put more into his award than that. He may incorporate a statement of his reasons or make some other document part of his award. Whether he has done so does not depend simply upon mechanics such as the pinning of documents together or on the mere fact of a reference or allusion in one document to some other document. The question is rather did the arbitrator incorporate his reasons with his conclusion to the intent that the whole should form his award. That is to say, was his award equivalent to a "speaking order"? That descriptive phrase was, it seems, first used by Lord Cairns in Overseers of the Poor of Walsall v. London and North Western Railway Co. [1] . It is now familiar in the law concerning certiorari: see R. v. Northumberland Compensation Appeal Tribunal; Ex parte Shaw [2] . It provides a convenient analogy to the present question. If an arbitrator makes his reasons part of his award, and expressly or impliedly makes his conclusion depend upon the validity of a particular hypothesis of law, then if that hypothesis be erroneous a court will quash the award.